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Welcome to the Clay & Company Blog

Clay & Company is a Houston-based commercial real estate brokerage, investment, and auction company serving the needs of governmental agencies, financial institutions, insurance companies, and individuals 
throughout the State of T
exas.

Our regularly updated blog covers local and national news, events, and happenings affecting Texas and the commercial real estate industry.

Commercial Real Estate and the Economy

Texas placed second on a list of states with the most commercial real estate development activity in 2012, according to a report by the NAIOP Research Foundation. The report measures how office, industrial and retail development contributed to the U.S. economy in 2012.
Generating 162,877 jobs and $4.34 billion in new projects and spending related to commercial real estate, the Lone Star state came in second only to New York. Texas ranked no. 1 a year earlier.

Nationally, commercial real estate supported approximately 2.3 million American jobs and contributed $303.4 billion to the nation’s economy, marking the second year that the sector posted gains since 2007.

Watch the below video produced by the NAIOP Research Foundation to see how commercial real estate development positively impacts the economy.

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HAR Video: The Houston real estate market shows no let up in September


Via Houston Association of Realtors Press Release

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Working with Inbound Investors

How can U.S.-based advisers foster business relationships with international investors? CCIMs offer these five tips:

1. Be patient and learn about where they are coming from. Ernest L. Brown IV, CCIM, from San Antonio suggests, “Study up on business models utilized. Understand why they are investing in the U.S. Learn their customs (many a mistake is made here) and expectations. Our business process is very different, even from other English-speaking countries.”

2. Travel. Expand your knowledge and education within those markets with which you’re working.

3. Don’t show just your listings.

4. Assemble the right team. Help your client make contact with lawyers, bankers, accountants, etc. that can further their understanding of the U.S. market and expand your international business knowledge.

5. Value the relationship. As with any client, you should show them you value their business and partnership. They will be loyal if you show them that you act honestly and pay attention to their needs.

See full article here.

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Texas Tops in Relocation Activity

AUSTIN (Texas Association of Realtors) – A report released yesterday by the Texas Association of Realtors (TAR) showed that Texas is a national leader in relocation activity.Welcome-to-Texas-texas-558322_913_593

Harris County is the most mobile county in the Lone Star State, ranking first in the state and third nationally for the largest inflow of households (67,299). Dallas and Tarrant Counties are the second- and third-most mobile Texas counties, ranking seventh (54,388) and 16th (40,699) nationally.

“Data from the Texas Relocation Report show that the continued growth of the Texas housing market is not a housing bubble but a genuine surge in demand fueled by job and population growth across the state,” said Shad Bogany, TAR chairman. “People are moving, and they’re moving to Texas. Clearly, Texas is a domestic migration destination.”

Bexar County, the central county for the San Antonio-New Braunfels metropolitan area, had the largest net inflow in Texas and the fourth largest net inflow of households (5,601) in the country. Williamson, Fort Bend, Travis, Denton, Tarrant and Montgomery Counties also ranked in the top 20 nationally.

Williamson County garnered the highest net inflow of households from out of state (1,846), followed by Montgomery County (1,226) and Bell County (849).

This report comes six months after U-Haul named Texas the number two growth state for 2012 and Houston the nation’s top relocation city. Austin was the third most popular in the 2012 relocation report.

The Texas Relocation Report is based on data from the National Association of Realtors’ 2012 Relocation Report and U-Haul’s 2012 Relocation Report. The report analyzes county relocation data for the 44 largest demographic areas in Texas.

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Real Estate Gifting

realestategiftEighty percent of real estate offered to qualified non-profit organizations has been turned away due to a lack of familiarity with procedures, evaluation process, legal and tax issues. However, charitable donations of real estate can be an avenue for needed funding and/or resources. For individuals or organizations, gifting real estate to a non-profit can possibly provide an income stream and may result in charitable tax deductions as well as the avoidance of capital gains tax. There are several options available, and in a new series from the CCIM Institute, different alternatives and their correlating benefits and issues are outlined.

Below is a brief overview of each option. Click on each option for more detailed information.

Outright Donation: An outright donation is immediate and occurs when an individual or corporation deeds real property to a charity outright or in trust. This is a clean transaction and does not activate capital gain tax to the donor. It also results in a charitable tax deduction.

A bequest is not immediate, as it occurs in a will where a charity is identified as a beneficiary upon the death of the donor.

Bargain Sale: In a bargain sale, real property is sold to a charity at less than fair market value. The donor bypasses gain on the gift portion and receives a charitable deduction on the gift portion but must recognize gain on the value received. In order for a transfer to qualify for bargain sale treatment, it must produce a charitable contribution income tax deduction under the Internal Revenue Code, and if the donor can’t take the deduction in the year of transfer because of other deductions, it can be carried over.

Charitable donations that provide income to the donor are structured as charitable gift annuities, charitable remainder trusts, or retained life interests.

Charitable Gift Annuities: Charitable gift annuities occur when a donor transfers real estate in exchange for a guaranteed life income under a contract. Generally, the charity receives the property, sells it, and contributes the proceeds to a trust company to make payments to the donor. A portion of the annuity income may be received by the donor tax free, but any capital gains taxes on the asset transferred in exchange for the annuity are paid over the annuitant’s life expectancy and determined by Internal Revenue Service tables. The amount of the annuity payment is fixed and does not change over time. At least 10 percent of the fair market value of the asset transferred must be left for the charity. Note that this type of annuity is not available in all states due to state regulation.

Charitable Remainder Trusts: Charitable remainder trusts are irrevocable trusts with two sets of beneficiaries: the income beneficiary and the charitable beneficiary. The income beneficiary is usually the donor who receives a percentage of income from the trust for life or a term of years. The charitable beneficiary receives the principal of the trust after the income beneficiary dies. The amount of income received by the donor depends upon the payout percentage chosen and the amount of income generated within the trust.

The remainder for the charity must be at least 10 percent of the fair market value of the assets transferred to the trust, which means that the annual payment to the donor will change each year depending on the value of the trust property. The higher the percentage payout, the lower the charitable income tax deduction. IRS rules cover percentage payouts and determine the net fair market value of the assets.

Retained Life Estate: In a retained life estate, a donor makes a donation of a primary or secondary home but continues to live in it or elects to rent it out for rental income, but also obtains a charitable deduction based on guidelines established in IRS tables. The deduction is the actuarial value of the reminder interest contributed to the charity. Upon the donor’s death, the property passes to the charity.

Each type has specific processes to follow to achieve optimal benefit to the donor and must be evaluated with the assistance of individuals with expertise in real estate gifting issues in order to make an informed decision.

Source: Real Estate Gifting Realized, the new program launched by the Education Foundation of the CCIM Institute, facilitates the donation of real estate to charitable organizations.

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The Latest List of Accolades

Screen Shot 2013-08-14 at 3.39.46 PMHouston has received great national attention recently repeatedly placing on best of lists. Here are some of the latest accolades for our dear city:

Houston Heights was named fourth best big-city neighborhoods in the country on CNN Money’s Best Places to Live rankings. With a median household income

of $63,500 and a median home value of $251,400, the Houston Heights offers an urban, walkable area with a cohesive neighborhood vibe while still having access to Houston’s affordable housing and abundance of jobs.

On CNN Money’s list of best earning towns West University ranked eighth and Bellaire came in fourteenth with median family incomes of $226,311 and $197,770 respectively.

Recently the New York Times ranked Houston No. 7 among the top 46 places in the world to travel this year for its diverse culture and food. We were the only city in the US to rank top 10.On Forbes list for Best Cities for Future Job Growth Houston ranked No. 3 with a projected annual job growth of 3.5 percent.

Houston’s Pass & Provisions restaurant came in at Number 6 for Best New Restaurant in the Country from Bon Appetit magazine. Writer, Andrew Knowlton, says: The dual concept (one kitchen, two distinct experiences) allows this talented team to both flex their culinary muscles and please the masses under one roof, making The Pass & Provisions the best restaurant(s) to open in Houston in the past year.

Photo: NYTimes.com Screen Shot

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CoStar Repeat Sale Analysis: Strong CRE Demand Powers Expanding Commercial Property Price Recovery

GetImage.aspxA summary of Randyl Drummer’s article for CoStar:

  • Across the Board Improvement’ is Prevailing Theme for CRE Pricing, Sales Volume, Fundamentals in May
  • Pricing of commercial real estate strengthened across the board reflecting solid market fundamentals, broadening investment activity and healthy demand for virtually all types of commercial properties, according to the latest CoStar Commercial Repeat Sale Indices (CCRSI) release.
  • The value-weighted index, which is heavily influenced by larger transactions and typically tracks with high quality core real estate prices, has now increased by 41% from its most recent trough in 2010.
  • The equal-weighted index, which is influenced by smaller, more numerous opportunistic transactions, has improved by 10% from its bottom in 2011.
  • The Investment Grade index measuring repeat sales of higher- and middle-quality assets reached its highest level in more than four years in May.
  • A significant trend in recent months has been the growing investor demand for smaller and lower-quality commercial property assets. Prices in this General Commercial segment are now rising in tandem with those in investment grade category.
  • Continuing strong second-quarter absorption in both the investment grade and general commercial categories is supporting the pricing gains. Another function of improving fundamentals and shored-up pricing has been the overall decline in distressed sales.

See full article here.

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Bloomberg.com: Property Crushes Hedge Funds in Alternative Markets

Below is a link to a good article Devin Banerjee on Bloomberg.com, which talks about real estate and alternative investing.

“For investors in real estate and REITs, valuations fell further and faster than other assets and have in the past three years jumped higher than the S&P 500.”

“Things that are way down are going to come back (Talking about the depressed value of Real Estate). On top of that, central banks have given people a prevalence of cheap money to borrow and get back into alternatives such as real estate.”

“Real estate has been a huge beneficiary of quantitative easing,” he says, referring to the Federal Reserve program to keep interest rates low by buying mortgage securities and other bonds. “When interest rates begin to rise, that’s going to curtail the longer-term appeal of real estate investing.”

See full article here.

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Happy Fourth of July!

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Happy Fourth of July from Clay & Company!  We can’t wait to see all of you photos from Freedom Over Texas. Our offices will be closed Thursday and Friday. Have fun and stay safe!

Image from Freedom Over Texas Facebook Page

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Big, Hot, Cheap and Right

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We recently picked up Big, Hot, Cheap and Right: What America Can Learn from the Strange Genius of Texas, the first book from Texas Monthly Senior Editor, Erica Grieder. Below is the publisher’s overview and editorial reviews. Have you read it? What did you think of Grieder’s historical and political analysis of the Lone Star State?

Overview

Texas may well be America’s most controversial state. Evangelicals dominate the halls of power, millions of its people live in poverty, and its death row is the busiest in the country. Skeptical outsiders have found much to be offended by in the state’s politics and attitude. And yet, according to journalist (and Texan) Erica Grieder, the United States has a great deal to learn from Texas.

In Big, Hot, Cheap, and Right, Grieder traces the political history of a state that was always larger than life. From its rowdy beginnings, Texas has combined a long-standing suspicion of government intrusion with a passion for business. Looking to the present, Greider assesses the unique mix of policies on issues like immigration, debt, taxes, regulation, and energy, which together have sparked a bonafide Texas Miracle of job growth. While acknowledging that it still has plenty of twenty-first-century problems to face, she finds in Texas a model of governance whose power has been drastically underestimated. Her book is a fascinating exploration of America’s underrated powerhouse.

Reviews

Chris Hayes, MSNBC Host and author of Twilight of the Elites
“Thirty years from now there’s a good chance that most of America will look like Texas and somehow, improbably, using some strange dark prose magic, Erica Grieder has managed to convince me that might actually not be so bad. Written with verve and nuance, this is a fascinating, provocative read. If there were a book like this for each state I’d read every one.”

Publishers Weekly
“Journalist Grieder (a senior editor at Texas Monthly and former Southwest correspondent for The Economist) pens a primer on Texas that is serious and lighthearted in turn. She might as well have referred to the “strange genesis” of Texas in her subtitle, as she runs through historical highlights and lowlights from the state’s beginnings to explain its present. Grieder’s account includes notably bizarre episodes, including the 1951 election in which both the governor and the state attorney general ran on both Democratic and Republican tickets, with the Democratic incarnations of each pulling easy victories. One of the book’s main themes is that by its annexation, “every single weird thing about Texas… was already established.” Another is that, despite its reputation, Texas is more than simply a bastion of conservative values, although the vaunted “Texas model” is basically defined by a “commitment to small government” as well as broad support for business. Grieder is never clear on whether this model is applicable or even appropriate for other states, but it works for Texas. Late in the book, she discusses the possibility that Texas might someday flip from being a red state to being a blue state. Anyone curious about or proud of Texas will find something of interest, as will readers of current politics.”

Kirkus Reviews
“In this brisk and sassy counterweight to recent book-length complaints about Texas, Grieder challenges common prejudices about the state and insists that Texas is a better place than people expect… [Grieder] delivers an extensive, perceptive analysis of the state’s politics—how it turned Republican in the 1990s and the prospects for a growing Hispanic population to bring it back into the Democratic column…. Due to the fact that Texas is thriving while much of America struggles, it might be wise to consider what Texas is doing right.”

The New York Times – Bryan Burrough
“…a smart little book…refreshing…on many levels. Outside writers have been regularly caricaturing the state since the novelist Edna Ferber introduced America to postwar Texas with Giant in 1952…Ms. Grieder’s is the rare book that takes stock of the Texas model without ridiculing many of its traditions and politicians. I tend to look askance at an analysis that attributes a company’s or a state’s success to events two centuries ago, but Ms. Grieder’s history lessons are persuasive.”

Wall Street Journal
“’Big, Hot, Cheap, and Right’ mixes equal parts history, political reporting, back-of-the-envelope economics and cultural commentary. For those who have never enjoyed a plate of Kreuz’s barbecue, toured the Alamo or attended the annual Sweetwater Rattlesnake Roundup, Ms. Grieder’s thumbnail sketch of Texana will make for an entertaining introduction. But most revealing may be the way she connects the state’s current boom with its unique history… a well-timed plea for the rest of the country to wake up and learn from its example.”

Fort Worth Star-Telegram
“Grieder uses a journalist’s objective eye to offer a primer on the Lone Star State, from its larger-than-life beginnings to what’s right with it today: strong economy, job creator extraordinaire, forward-thinking energy policies (it’s not all about the oil), an immigration policy that doesn’t alienate Latino voters, and population growth.”

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